Austria implements fixed-cost subsidy to mitigate impact of COVID-19 - EY
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28 May 2020
Global Tax Alert
Austria implements
fixed-cost subsidy
to mitigate impact
of COVID-19
Executive summary
EY Tax News Update: Global In order to support the recovery of the Austrian economy from the impacts of
Edition COVID-19, the Austrian Federal Government will provide a fixed-cost subsidy as
EY’s Tax News Update: Global an aid measure within the framework of the Corona Aid Fund. On 23 May 2020,
Edition is a free, personalized email the European Commission approved the fixed cost subsidy in a total amount of
subscription service that allows €8 billion (IP/20/928) after an examination of European Union (EU) State aid
you to receive EY Global Tax Alerts, rules. On 25 May 2020, the Austrian Federal Ministry of Finance published the
newsletters, events, and thought adapted Directive (Fixkostenzuschuss Richtlinie) in the Austrian Federal Gazette
leadership published across all areas (BGBl. II No. 225/2020).
of tax. Access more information The basic requirement for a fixed-cost subsidy is the loss of sales in a specific
about the tool and registration here. period due to COVID-19 of at least 40% compared to 2019. Entities can receive
subsidies of up to 75% of fixed costs. Actual fixed costs incurred in 2020 are
Also available is our EY Global Tax the basis to calculate the subsidy. An advance payment of up to 50% of the total
Alert Library on ey.com. amount requested is possible. Authorities announced that the first payments
will be made within 10 days upon application.2 Global Tax Alert
Detailed discussion Beneficiary entities
A fixed-cost subsidy is granted only to entities that meet the
Loss of sales, calculation of fixed cost subsidy following conditions cumulatively:
For the calculation of the loss of sales, top-line sales as • Loss of sales due to the spread of COVID-19
declared in the income tax/corporate income tax return are • The company has taken reasonable measures to reduce
relevant. Sales of the second quarter of 2020 (1 April to the fixed costs to be covered by the subsidy (obligation to
30 June 2020) must be compared to sales of the second minimize damage)
quarter of 2019 to calculate the loss of sales. • Registered office or permanent establishment in Austria
As an alternative to the observation period of second and operational activity in Austria
quarter of 2020, up to three connected monthly observation • Bonus payments made in 2020 to the managing directors
periods may be chosen for the period of 16 March 2020 to must not exceed 50% of the bonus payments made in
15 September 2020: 2019; remuneration paid in 2020 to the management and
• Observation period 1: 16 March 2020 to 15 April 2020 employees including remuneration in kind is not inadequate
• Observation period 2: 16 April 2020 to 15 May 2020 • No dividend distributions, no repurchase of own shares
• Observation period 3: 16 May 2020 to 15 June 2020 and no release of reserves against retained earnings in the
period of 16 March 2020 to 16 March 2021; moderate
• Observation period 4: 16 June 2020 to 15 July 2020 dividend distribution practice until 31 December 2021
• Observation period 5: 16 July 2020 to 15 August 2020 • No entity in difficulty under Article 2 Sec 18 of the
• Observation period 6: 16 August 2020 to 15 September EU General Block Exemption Regulation 651/2014
2020 (Allgemeine Gruppenfreistellungsverordnung)
Fixed-cost subsidies of the follow percentages will be • No opening of insolvency proceedings or the existence of
granted: the conditions for the opening of insolvency at the request
of creditors at the time of the application:
• 25% fixed-cost subsidy in the case of a loss of sales of 40 to
60% −−In this case, a fixed-cost subsidy may be granted based
on the EU de minimis regulation. In total, de minimis
• 50% fixed-cost subsidy in the case of a loss of sales of 60 to
aid granted to a group of may not exceed €200,000.00
80%75% fixed-cost subsidy in the case of a loss of sales of
during the last three years
80 to 100%
• No aggressive tax planning (i.e., no non tax-deductible
The fixed cost subsidy is limited per entity to: interest or royalty payments to low-taxed affiliated entities
• A maximum of €30 million with a 25% subsidy during the last three years assessed)
• A maximum of €60 million with a subsidy of 50% • No final fiscal criminal penalty (excluding minor fiscal
• A maximum of €90 million with a 75% subsidy offenses) or corresponding association fines for deliberate
intent during the last five years
If several affiliated entities submit applications, the
• Obligation to pay particular attention to the preservation
maximum amount is only available once.
of jobs and the setting of reasonable measures to promote
The fixed-cost subsidy is reduced by grants from local sales and job preservation
authorities in connection with COVID-19 and compensations
• Confirmation that fixed-cost subsidies are not used to
under the Epidemic Act. There is no reduction for payments
repay financial liabilities and to indirectly finance the
relating to Corona short-time work.
acquisition of fixed assetsGlobal Tax Alert 3
No fixed-cost subsidies are granted to: i. Personnel expenses incurred exclusively for the
• Entities with more than 250 employees (full-time processing of crisis-related cancellations and rebookings
equivalent) as of 31 December 2019 who have terminated j. Where a fixed-cost subsidy of less than €12,000 is
more than 3% of the workforce instead of using the short- requested: reasonable tax advice, audit or accounting
time working model (exemptions available based on costs not exceeding €500.00
separate application)
k. Expenses for other payment obligations not affecting staff
• Entities in the financial sector, in particular credit
institutions, insurance companies, investment firms and Depreciation of fixed assets is not part of a fixed-cost subsidy.
investment services companies, pension funds and non-
profit organizations Application and payment
• Entities in the (in)direct exclusive ownership of local The application for a fixed-cost subsidy must be filed with
authorities and other bodies under public law COFAG (special entity set up by the Austrian Federal Ministry
of Finance to process COVID-19 subsidies) via FinanzOnline
• Institutions with a degree of self-funding of less than 75%
(electronic filing system of the Austrian tax authorities) and
in the (in)direct majority ownership of local authorities and
must be submitted between 20 May 2020 and 31 August
other bodies of public law
2021. A disbursement in installments may be requested.
• Companies receiving payments from the non-profit support • The first tranche is limited to 50% of the total subsidy and
fund may be applied for from 20 May 2020.
• Newly-established companies that did not generate sales • The second tranche is limited to 25% and can be applied for
before 16 March 2020 from 19 August 2020.
• The third tranche can be requested from 19 November
Definition of fixed costs 2020.
Fixed costs are exclusively expenses arising from an
operating domestic activity for the period from 16 March The first tranche does not yet consider the value losses of
2020 to 15 September 2020, provided that they fall into at seasonal goods and tax advisor costs. The disbursement
least one of the following categories: of the third tranche requires qualified accounting data. If
they are available in due time, the third installment can be
a. Commercial premises rents and leases directly related to
requested as early as the second.
business activities
The application for a fixed-cost subsidy must include a
b. Insurance premiums (less insurance compensations)
presentation of the estimated or actual loss of sales and
c. Interest expenses on loans, provided that loans are not fixed costs in the relevant period.
passed on to affiliated entities as loans
For subsidies exceeding €90,000, the amount of the loss of
d. Financing cost share of lease payments
sales and the fixed costs has to be confirmed by a tax advisor
e. Royalty payments to third parties or public accountant and the application needs to be filed
f. Expenditure on electricity, gas and telecommunications by a tax advisor or public accountant. If the entire subsidy
does not exceed €12,000, then the application does not
g. Loss of value of perishable and seasonal goods, provided
have to be filed by a tax advisor or public accountant. If the
that they have lost at least 50% of their value due to
entire subsidy is between €12,000 and €90,000, then the
COVID-19
confirmation of the tax advisor or public accountant may be
h. For business subject to income tax: appropriate limited to confirmation of plausibility.
entrepreneurial wages (between €666.66 and €2,666.67
per month)4 Global Tax Alert
At the request of COFAG and the tax authorities, the Subsequent verification and repayment
applicant must provide further information necessary for the The subsequent review of fixed-cost subsidies is carried out
examination of the application, as well as documents and by the tax authorities. In any event, in the case of subsidies
confirmations. In addition, the applicant must confirm that over €10 million, an ex-post case-by-case assessment must
all prerequisites for obtaining a subsidy are fulfilled. be carried out, in particular the net loss (actual damage)
The applicant must also undertake to provide all information will be examined in order to avoid overcompensation of the
at the request of the competent authorities, to grant damage. For subsidies of up to €10 million, similar checks
the competent authorities the right of examination and are foreseen on a sample basis.
inspection at any time and to notify them without delay if COFAG shall claim back fixed-cost subsidies in so far as it is
relevant circumstances change. later apparent that the conditions underlying the subsidy
do not correspond to the actual circumstances. Abuse of
Decision on applications subsidies entails criminal law consequences.
Applications are examined by COFAG and the subsidy is More information can be found at the following link in
paid out after approval. In the case of a fixed-cost subsidy German: https://www.fixkostenzuschuss.at/
exceeding €800,000.00, the approval of the supervisory
board of COFAG is required. The overall framework for subsidies to cover fixed costs
is €8 billion and it has been approved by the European
Fixed-cost subsidies are granted on the basis of a private law Commission. As noted, there is no legal entitlement to a
agreement. There is no legal entitlement to the granting of fixed-cost subsidy. Due to the cap on the total amount,
fixed-cost subsidies. entities should promptly address the issue of fixed-cost
subsidies and process the necessary data. As many unanswered
questions remain, further clarifications can be expected.
For additional information with respect to this Alert, please contact the following:
Ernst & Young Steuerberatungsgesellschaft m.b.H., Vienna
• Andreas Stefaner andreas.stefaner@at.ey.com
• Roland Rief roland.rief@at.ey.com
• Markus Schragl markus.schragl@at.ey.com
• Markus Stefaner markus.stefaner@at.ey.com
• Klaus Pfleger klaus.pfleger@at.ey.com
• Patrick Plansky patrick.plansky@at.ey.com
• Dominik Novak dominik.novak@at.ey.comEY | Assurance | Tax | Transactions | Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. © 2020 EYGM Limited. All Rights Reserved. EYG no. 003588-20Gbl 1508-1600216 NY ED None This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. ey.com
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